The Building Tradesman Newspaper

Friday, June 23, 2017

Neighbors show Michigan what to expect with prevailing wage repeal

By The Building Tradesman

For building trades workers, seeing lower wages is the primary effect of witnessing the repeal of a statewide prevailing wage law.

But that's just the start.

In Wisconsin, beginning Jan. 1, 2017, municipal public works projects have no longer been subject to the protection of a prevailing wage law. 

As a result, the Wisconsin Contractor Coalition reported law month, "after only four months with no prevailing wage protection, municipal projects awarded to out-of-state contractors is up 53 percent this year compared to 2016. Contractors from Kentucky, Missouri and Florida are taking Wisconsin work."

The report said municipal projects awarded to out-of-state contractors from January through April 2016 was $20.9 million. For the same time period in 2017, out-of-state contractors were awarded $32 million in work. "This trend should be alarming to all Wisconsinites," the coalition said. 

Neighboring Wisconsin has mirrored the anti-labor trend in Michigan. Both have had all-Republican legislatures and a GOP governor, and both have adopted right-to-work laws in recent years. Michigan is only a whisker away from losing its prevailing wage law due to a statewide petition drive; Wisconsin's legislature outlawed the use of prevailing wage rules for local municipalities in 2015 (going into effect on Jan. 1, 2017). A fuller statewide repeal is in the offing. 

“Wisconsin workers deserve to make higher wages not lower wages,” said Wisconsin Assembly Minority Leader Peter Barca. “Contracts that should be going to Wisconsin companies are being given away to out-of-state companies from Florida, Kentucky and Missouri. For the last two years, Gov. Walker has told the Wisconsin people that repealing prevailing wage laws would save the state money, but that just isn’t true. By paying our workers a good salary to work on municipal and state projects, we get a better result. Giving away contracts to companies based in Illinois, Iowa, or Michigan will cost Wisconsin taxpayers in the long run.

"The governor’s plan to completely do away with prevailing wage for state-funded contracts will prove disastrous for Wisconsin’s small businesses and workers," Barca continued. “We’re fighting to create new, well-paying jobs, to increase pay for people who work hard and to bring accountability to how Wisconsin tax dollars are spent. Republicans seem to want more of our jobs to go to low-wage workers from out of state.”

Americans for Prosperity-Wisconsin, a group pushing the prevailing wage repeal bill, said the measure would restore fairness in contracting.

“This bill is all about giving a fair shot at government work to the majority of Wisconsin construction workers that don’t want to be in a union,” said Eric Bott, AFP’s Wisconsin state director. “This legislation will help protect thousands of Wisconsin workers, level the playing field for small businesses, lower the burden on taxpayers, and reduce opportunities for cronyism.”

All of Bott's points have been repeatedly debunked. Prevailing wage is not a union or nonunion issue, it is a wage that "prevails" for a given geographic area, and nonunion workers often benefit from a higher wage. Proponents of prevailing wage have also pointed out the obvious: that prevailing wage is what actually levels the playing field for bidding contractors, who bid on contracts with worker wages being the same as their competition.

And as for taxpayer savings, numerous studies have shown repeal of prevailing wage laws offer zero benefit to taxpayers.

Michigan's southern neighbor, Indiana, instituted a right-to-work law in 2012, and then repeal of the state's prevailing wage law over the signature of then-Gov. Mike Pence in 2015. 

So far, the results haven't impressed Indiana's House Assistant Majority Leader Ed Soliday (R) who admitted this spring that the prevailing wage repeal hasn't brought the promised benefits.

"We got rid of prevailing wage and so far it hasn’t saved a penny. Probably the people most upset with us repealing (prevailing) wage were the locals. Because the locals, quite frankly, like to pay local contractors and they like local contractors to go to the dentist in their own town.

"The exaggerations in those hearings that we were going save 22 percent. Well, total labor costs right now in road construction is about 22 percent, and I haven’t noticed anyone who’s going to work for free. (They claim) there’s some magic state out there that’s going to send all these workers into work for $10 an hour and it’s just not going to happen. There’s not 22 percent savings out there when the total cost of labor is 22 percent. It’s rhetoric. So far, I haven’t seen a dime of savings out of it."

Taxpayers in Wisconsin, Indiana and Michigan aren't likely to see any benefits with prevailing wage repeal, while construction workers will likely see their wages decline, said the labor-backed Economic Policy Institute on March 24.

"Unsurprisingly," said the EPI, "median construction wages are far lower (21.9 percent) in the 20 states that have no prevailing wage law than in the states that still do protect prevailing wages. Even after taking into account cost-of-living differences, median wages are almost 7 percent lower in states where there is no prevailing wage law."